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Report Highlights:

While vodka currently dominates the distilled spirits market in Poland, demand for imported whiskey is growing rapidly reflecting an emerging openness in consumers to non-traditional beverages such as that produced in the United States. Imports of U.S. distilled spirits increased by 41 percent between 2011 and 2012 show strong growth in the first seven months of 2013.

General Information:

I. Introduction

Distilled spirits consumption has steadily increased in recent years in overall consumption and market share in the alcoholic beverage category. In 2012, distilled spirits consumption was 43 percent of the alcoholic drinks market value, slightly behind beer which held 46 percent market value. By 2017, market share for distilled spirits is expected to increase by less than half of a percent while market share for beer should decrease by two percent. From 2007-2012, sales of spirits increased by 28 percent, however, growth is expected to slow to 6 percent over the next five years, 2012-2017, as the market nears saturation.

Despite nearing per capita saturation, changing consumer preferences toward whiskey consumption are favorable for U.S. exporters. While vodka dominates the distilled spirit market in Poland, its market share is eroding. In 2007, 80 percent of distilled spirit sales were of vodka; this share dropped to 74 percent by 2012, and is expected to fall even further to 71 percent by 2017. Whiskey sales, however, have shown the opposite trend. In 2007, whiskey accounted for a mere 4 percent of distilled spirits sales but by 2012, held 9 percent of the market value. By 2017, whiskey sales are expected to account for 12 percent of distilled spirit purchases in Poland.

Market Sector Opportunities and Threats

Retail & HRI Market Sector

1) Entry Strategy

Contacting the right importer will help U.S. businesses enter the Polish distilled spirits market. Most supermarkets, hypermarkets, specialty shops, hotels, restaurants, and catering companies buy the majority of their distilled spirits through wholesalers. Wholesalers work both with large importers and independently. They have their own distribution channels and marketing contacts. U.S. distilled spirit exporters may obtain a list of current importers by contacting the Office of Agricultural Affairs at the U.S. Embassy in Warsaw.

2) Market Size, Structure, Trends

In 2012, U.S. distilled spirits held 9 percent of the market value for imports to Poland, behind Finland at 13 percent, and the UK with a 42 percent share. In the same year, 78 percent of distilled spirit imports into Poland from the U.S. were whiskey. From 2011 to 2012, imports of U.S. whiskey increased by 38 percent. Similarly, imports in the first seven months of 2013, were 40 percent greater than the same period in 2012. The U.S. is the largest exporter of rum to Poland with 50 percent market share, however the market for rum is much smaller than whiskies, imports in 2012 were 4.2 million USD for rum compared to nearly 92 million USD for whiskies.

Most distilled spirits are purchased at small independent grocers and consumed off-site. In 2012, eight percent of sales were made in bars and restaurants, a trend that is not expected to change in the short run. Due to strict advertising rules, distilled spirits in Poland are commonly marketed through in-store promotions, concerts, festivals, and other marketing events. These events as well as exposure through the HORECA industry are partially responsible for driving demand away from vodka towards whiskies. Whiskey consumers are least responsive to changes in prices and generally do not exhibit stronger brand loyalties than more price conscious consumers.

The UK and U.S. dominate the whiskies market in Poland with Scotch whisky from the UK and whiskey that is neither Scotch or Bourbon from the U.S. Strict labeling regulations and distillation methods for distilled spirits are an international norm and enforced in Poland, such as whisky labeled Scotch must be from Scotland or brandy labeled Cognac must originate from the Cognac region of France. Vodka is primarily imported from Finland, brandy from France, while the majority of liqueurs and cordials are imported from Ireland. Imports of U.S. liqueurs and cordials increased significantly from 2011 to 2012 and show growth through the first half of 2013. While the liqueurs and cordials market is expected to decline over the next five years, it possesses potential for further U.S. exports.

Market Access

-Tariffs

All distilled spirits entering Poland are charged an excise tax. Prior to importing distilled spirits, Polish importers must provide the U.S. firm with excise bands. These excise bands need to be applied to all bottles prior to arriving in Poland and constitute partial payment of the excise tax. The value-added tax (VAT) is 23 percent for distilled spirits in Poland.

Poland’s EU accession in May 2004 significantly reduced import duties for non-EU suppliers. Now that Poland has adopted EU external duty rates, U.S. exporters face lower duties, which stimulated higher exports of distilled spirits from the United States. However, Poland’s membership in the EU-28 has given European distilled spirits an increased comparative advantage in the Polish market due to the internal duty free market. European suppliers are also no longer subject to third country import paperwork required for entry from non-EU supplying countries.

Detailed information on distilled spirit tariffs can be found in the official EU Journal in pages 183-185.
The Minister of Finance’s working regulations on excise taxes on several products assesses the following tax:

HS 2208 - Ethyl alcohol – 4,960 PLN (1,610 USD) per hectoliter of pure alcohol

(1 USD = 3.08 PLN, November 7, 2013)

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